* The full plan is here. My initial take is it looks both fairly specific and pretty darned gutsy, which are both rarities from Bruce Rauner.

However - and this is a huge “however” - Rauner’s own data shows that a wide service tax would only raise $577 million a year. That’s barely a drop in the bucket. You can’t noticeably cut the income tax and expect to freeze property taxes on a mere half bil in new revenues…

Rauner proposing to roll back income tax, "modernize the sales tax" and "freeze property taxes"

So let me get this straight. He wants to replace 4 and eventually $5+ billion in revenue (repealing all the way back to 3%) with $577 million in painful, across the board taxes on dozens of services? And this is pro-growth - putting a new sales tax on my firm’s revenues? Umm, don’t think that’s gonna help and it still doesn’t solve the budget hole.

Several months ago when I took an hour or so to analyze how the income tax rollback would affect the out of pocket for our family versus a new sales tax on services (such as hair cuts and others on the list above), it was obvious that we personally came out way ahead with the rollback. I am sure other families in IL who use services differently might have the opposite result if they did an analysis on their personal finaces. This is why I am not at all sure that the whole income tax rollback/additional sales tax debate and name calling on dueling campaign videos is going to be all that effective. I also do not believe by any measure that it is a clean or obvious Democratic versus Republican policy issue.

Huh. I’m actually pretty impressed all things considered. Maybe it’s a case of diminished expectations, but I can’t help but think more highly of him today than I did yesterday. Though that doesn’t say all that much.

I am impressed that the Rauner Crew has issued something. I am also impressed that Rauner has laid out the taxes as he has, and even having his $577 million out there, knowing it is not making a dent.

Why?

Rauner is now standing for something. Rauner is standing up to be judged by the voters by specific actions he as governor would want implemented.

These are not feel-good ideas. There will be hits. It took guts to put to paper a plan like this, knowing the arrows are poised and the hanging of “taxer” sign is now going to be hung around his neck. I am impressed.

I come at this, as in most cases, from the political. There are far too many here more well versed in the economic and taxing implications to budgetary needs and forecasts, and I am glad when those commenters allow a dope like me to actually, really learn what it all really means in the dollars, and the “sense”. But, the political animal in me is impressed with the courage and the “stones”, as Rich used, to lay out there something that is going to be a major campaign issue, to the bad, or good, but for sure to the merits. Well done.

If Bruce Rauner and Evelyn Sanguinetti can take this plan and campaign on its merits, it’s flaws, speak to the economic, and to the governmental AND the political to get this passed, or amended, or shaped to govern, then you tip your cap. Tall order, ain’t gonna be easy, but you can’t deny that rolling these ideas out, that is challenging us voters to look and judge, not guess and assume.

I know attorneys are monsters and everything so anything bad should happen to them, but I am curious how adding huge taxes on legal services is going to promote a better business climate for the state when its business people that rely on attorneys as much as anybody. Also would like to know what Rauner thinks these taxes on legal services would do to attorney jobs in Chicago. Don’t see anything on his potential sales taxes going after any one in finance, predictably, but I guess that’s the only industry that matters to a vulture capitalist like him.

P.S. Bruce, the reason LLCs cost more than corporations to file is an LLC confers additional benefits than a corporation does as a business entity. The state should continue to charge more for LLCs than it does corporations.

Big R is always staunchly in favor of passing the tax burden from billionaires to the least of our society. This is no surprise, As mentioned earlier, this plays into PQ campaign strategy quite eloquently. There was a day when a guy was that far ahead, he kept his trap shut until he had to talk.
Its come to the point that voters reallly don’t care how what Rauner says or does, they simply want the hapless Pat Quinn gone. Lets test that and see where this goes.

The property tax freeze makes for a good sound bite and popularity. But even Arizona allows a 2% increase each year - and they have one of the lowest tax rates relative to property value in the nation.

With the State reducing dollars to schools - the property tax has been the only source of dependable revenue. Freezing the revenue sounds good - but is not practical in the long term.

I saw former Governor Jim Thompson talk about taxing services a few years back. Everyone in Springfield must know about this problem with the sales taxes in Illinois. Also let’s talk about the sales tax on gasoline.

So, Quinn and fellow dems want to raise (well, keep the rate the same) for one tax. Rauner wants to raise 26 taxes, cut one and freeze one? How realistic is it to think any GA would vote yes on 26 new taxes when they couldn’t agree to keep 1 the same.

While I ideologically support taxing services to offset a lower income tax, the numbers still have to balance as to not cause a deficit. A good first step but still need a plan for the other revenues not being recovered through expanding the sales tax.

First thing I noticed is that one of the biggest categories of “untaxed” services is “sewer and refuse, industrial and residential use”. Services which are typically provided by municipalities in Illinois.

I really look forward to - steve schnorf -, - RNUG -, - AA -, and the countless others to address the valid point - 47th Ward - made as Rauner’s next step;

Crafting a budget.

Crafting a budget given his economic plan, and where it fails, and/or lacks sufficient funding.

As - wordslinger - stated, it opens a real discussion of the public policy question.

Dollars spent somewhere and not other places is dictating policy. That discussion will be interesting.

I am really looking forward to this all being discussed, dissected, rationalized, and finally to the political, and discussing the passable, non-starters, and where the gray is found, for common ground of governing.

The Quinn shills are showing themselves to be pretty stupid today. What with the talk of “regressive taxes” and “shifting burden on to the rest of society”. I mean, did u even read the plan? Snickered at the DGA response - not even a lick of substantive response. Went straight for the irrelevant character assasination.

This is not a solution…progressive graduated income tax is most fair way to spread tax burden. His own figures demonstrate that Brucie is not serious about solving any of state financial problems. He can say he issued a plan, but not a solution.

To everyone saying this isn’t regressive, sales and service taxes hit people who spend all of their income harder than folks like Rauner. Service taxes are slightly less regressive than sales taxes because the extremely poor use few services. They hit the middle class hardest. Bruce and pals make tens of millions per year. They only spend a small portion of their income on goods and services. Let’s assume the average paycheck to paycheck person spends 70% of their income on goods and 30% on services, they now have to pay about 7% on the 30% while saving about 1% on their tax burden. Their taxes go up, because they keep an extra 1% of their income, but have to pay 7% on 30% of that income, or 2.1% more. Rauner likely spends less than 1% of his money on services, so while he gets 1% of 50 million dollars back ($500,000), he will have to pay. 07% ($35,000) more. Gee, I wonder why he and his pals support it.

Sales and services taxes disproportionally favor massively wealthy people like Rauner, at the expense of the low and middle classes, because folks like Rauner only spend a small portion of their income.

“However - and this is a huge “however” - Rauner’s own data shows that a wide service tax would only raise $577 million a year.”

With the other plan he recently released, wouldn’t the combined plans generate around a billion dollars in revenue, or perhaps slightly more? That still doesn’t cover the revenue shortfall we’re expecting.

“To everyone saying this isn’t regressive, sales and service taxes hit people who spend all of their income harder than folks like Rauner.”

Though raising the income tax is unpopular, I believe there was one poll in which the millionaire surcharge is popular. That’s one way to go to help fix the state’s problems, and even Adam Smith, capitalism’s “founding father,” would probably have supported this, since he supported progressive taxation.

I believe that at this point in history, and with our current distribution of income and wage growth, the ones who can most afford it should be compelled to contribute more.

Btw- Rauner might have more explaining to do on how he will cut/ increase revenue to craft a budget, but phasing out the tax increase in Jaunary is supposed to cause a $5.1 billion hole over the next calendar year. $577 million is a bit over 10% of that shortfall, do plenty more work needs to be done to make a balanced budget. Looking forward to see how he will pull that off (legally and constitutionally, of course). The mopes on both sides of the isle haven’t been able to do it. If he can spell out his Full plan for making up that $5.1 B then maybe he could be an effective governor and leader.

Yes, glorious teacher i understand. In a blanket service tax that would be the case except he has a list of services to tax. They are net neccesities and most of not all are services wealthier people use like interior decorators, etc. Thats why I am wondering if you actually read the plan. Illinois currently taxes 17 service taxes - Iowa 94. Didnt know they were so backwards with their 4.4% unemployment. Also the “U” was because im typing on small phone, sorry to offend.

Let’s be clear. I don’t like Rauner and don’t think it would be good for the state if he were elected. Having said that, his proposal to tax services is a milestone. Progressives, especially in the Democratic party, have been lobbying for years in favor of a tax on services, especially to reduce the sales tax, which is so so heartbreakingly unfair and regressive. So, kudos to Rauner for getting this discussion going. But here’s one big question: I scanned his proposal and don’t see a reference to taxing financial services. Come on, Bruce! Get your big boy pants on and take battle to your cronies on Wall Street. Maybe then we will take you seriously on this.

Definitely the most detailed and impressive piece from Raunervich’s campaign. This piece does respond to the criticism that he has failed to provide specifics. However, it is written to try and camouflage some vital details. For example, by proposing to phase out the 67% Quinn tax, he is effectively calling for an modified extension of the income tax. The services included in this plan seem to be chosen to avoid angering too many middle class voters.

As to my react to the plan, as many have stated, the math doesn’t add up. The piece seems to be arguing for a trickle down effect should his policies be implemented, i.e. references to taxes from new employees and new businesses.

I have often stated that I am not a fan of either major party’s nominee; however, I will give them some credit. It may have been floating around for several years, but him getting behind it and forcing some discussion is something I welcome.

It certainly is more detailed than what he’s said before, but that’s a pretty low bar. Frankly, I couldn’t read the whole lot of it because all that was hitting my eyes was “Wah wah Quinn bad wah wah Madigan evil.” Two things specifically though:
Freezing property taxes sounds good, but where is the money for schools going to come from? Especially if he pushes pensions down to the local level.

The school/industry partnership sounds good too…if you happen to live near one. But there’s a whole lot south of I-80 where about the only business within 15 miles is a Casey’s gas station.

And the third of the two specific things, noting how exports to select countries have gone down…the dollar is much stronger against other currencies that it was a few years ago. Is that taken into account? (I doubt it.) Any why are exports down? Wah wah Quinn bad, wah wah Madigan evil. And what about exports to other countries?

Illinois currently has one of the most regressive state and local tax systems among the 50 states. Extending the regressive sales tax to services will aggravate that regressivity, even though it wouldn’t affect the poorest residents who can’t afford services. It’s irrefutable that billionaires would gain under the Rauner plan, with lower income taxes and frozen property taxes in return for a 7% tax on certain services.

===–So is the story above the fold tomorrow going to be Rauner’s plan or the LAC? My vote is the LAC.–

You lose.===

Yes.

The twitter react between the reporters, both the Quinn Crew, and then the Rauner Crew, the LAC “Day 2″ gets bumped.

…

Maybe on purpose?

Yesterday didn’t go well, so roll this out. They were ready to roll it out, paperwork and all, just picked a day to change the narrative. “The Quinn Federal Probe” issue is going to be an everyday thing from now on, roll this out to cover Dopiness of tarnishing that gift, makes some sense, and…

…the limited LAC coverage makes this plan not the only story clouding the heads of the reporters.

Anon at @ 2:05 pm wrote: Illinois currently has one of the most regressive state and local tax systems among the 50 states. Extending the regressive sales tax to services will aggravate that regressivity. . . .

That’s not really accurate. What makes the goods sales tax regressive on is that we end up paying it for virtually every item they buy, including necessities, such as food and clothing. And because of that, poor people end up paying an largly equitable amount.

Some states avoid the regressive results associated with goods sales taxes by exempting certain things (food, clothing, books, art supplies, etc.) or by taxing only luxuries (motor boats and jewelry). Massachusetts has an ingenious way of avoiding this regressive result when it comes to foodstuffs. In that state, food is not taxed, unless it has added sugar or another sweetner as an ingredient. Thus, a loaf of bread with boloney and cheese and mustard would not be taxed; but coca-cola would be. Not a bad idea.

Taxing services need not have the same regressive result as the wholesale tax on all goods, because many services are not necessary, and thus fall into the category of “discretionary” or “luxury.”

When it comes to a tax on services, the devil is always in the details, and there are many ways to craft the tax to avoid regressive results. For example, rather than tax a particular type of transaction (i.e., “hair cutting,”), the tax could be on that type of transaction if the charge to the customer exceeds $50. In this scenario, your barbers and hair-cutteries would be exempt, while your high-end stylists at Nordstrom’s would have to pay. Not a bad outcome at all.

As I said, the key to making a service tax not regressive is in the details. So, let’s see how well Rauner details his plan, and whether he has the “stones” (as our loving host puts it) to include taxes on financial services.

P.S. Bruce, the reason LLCs cost more than corporations to file is an LLC confers additional benefits than a corporation does as a business entity. The state should continue to charge more for LLCs than it does corporations.

I really doubt that is the reason, I suspect that is was a new entity type and a new chance for revenue for the state.

The big advantage is it is a simpler form of organization that offers some legal protections. So if your LLC has an issue, it is harder for someone to take your house in litigation than it is for a regular partnership or sole proprietorship.

In terms of tax benefits, there are not a whole lot since the profit/loss on an LLC passes through to the individual owner(s) personal income tax.

Disincentivising spending is generally a bad thing. We shouldn’t be debating reducing the tax burdens of the uber wealthy and increasing the burden on the middle class. The only way out of this mess is a progressive income tax. I remain convinced that this reality is the reason Rauner is running, and his largest donors are so supportive. They see the progressive tax rates as an inevitability, unless one of “the smartest guys in the room”TM rides in to save the day and fixes our state with their genius. Seriously folks, there’s a reason these folks love Indiana and Wisconsin but live here in Illinois. Check out our top tax rate (hint it’s the same as yours) compared to theirs.

Without significant economic growth the plan won’t work, the service taxes are not adequate to replace the loss in relation to income tax revenue. To give Mr. Rauner some limited credit he does not make the claim that the service taxes are a full replacement for the income tax loss.

Everything Rauner does to make Illinois more business friendly in his plan is also being done in numerous other Republican controlled states. The only thing that will drive the kind of growth Rauner seems to want will be driving down the average earnings of Illinois workers, not necessarily the minimum wage itself which Rauner references but the average wage in the State of Illinois. Basically Rauner wants to make us competitive with Mississippi. The average per capita annual income in Mississippi is the lowest in the U.S. and yet its unemployment rate is 7.7% above our own. Yes this plan will all work out for the best.

Rauner has yet to address in real terms, a balanced budget plan for Illinois government - with actual figure that balance out. If he can cut income taxes and freeze property taxes, and increase spending for education - and still balance the budget, I’d like to see his math.

So far a couple of weeks ago he came up with a billion in savings by cutting 800 million from CMS (but he didn’t say what cuts to CMS he would make) - and by cutting out the State’s airfleet and no longer transporting chickens.

Now he’s come up with 600 thousand in sales tax revenue. None of this comes close to making up for the billions of lost revenue from lowering the 5% income tax - or the money the State may need in the future if the recently passed pension law is thrown out.

au contraire, the math does add up. Remember in English your teacher telling you that in sentences such as “Jump”, the subject was understood? What you’re missing is the understood subtraction in this lesson plan, and that’s fine. This is an adult proposal, and it begins to lay out more clearly a significant difference between Governor Quinn and Bruce Rauner, one that is a legitimate subject for an election in a state whose budget problems need to be legitimately addressed after November.

Looking at this plan, and given the revenue challenges, and the new revenue streams proposed, ate we at the point to ask how much cutting may need to be done to get the revenue in line with spending, and also figuring pension obligations?

Rauner is making new and Quinn is reacting poorly with rehash “billionaire” quips that look ungubernatorial.

Hey, we all know how the pro would handle Rauner - with seriousness and respect. It is embarrassing to see that the challenger finally puts up something beyond shallow, but our real Governor reacts like this!

When your challenger looks serious - get serious, or your challenger looks like better gubernatorial material than you do..

Sorry Steve. For once we don’t agree. This plan is a joke. Yes it is a beginning, however this is still policy light. This state needs a comprehensive plan. Not just a dueling argument of tax hikes without the necessary cuts as well. I’m criticizing both campaigns at this point. But come on Rauner has been campaigning for a long time…tell me something comprehensive. At least Quinn admits he needs a real tax hike continuation.
Also while I’m prepared to vote for Bill Cosby’s sweater yet again.

“Are we at the point?”, Willy? I suspect that the Rauner campaign is not done yet, the election being almost 120 days away. He is beginning to talk about more comprehensive tax reform, so I suspect we will be hearing more on this subject. So, we won’t know the final math for a while. Right now, based on today’s release I would say that Governor Quinn’s vision sees us having around $4-5 billion annually more in revenue available 5 years from now than Bruce Rauner’s does. But, I expect there will be more for us to run walk-ups (and walk-downs) on, so this is a starting point.